We Think You Should Be Aware Of Some Concerning Factors In Hyosung's (KRX:004800) Earnings

Hyosung Corporation's (KRX:004800) robust recent earnings didn't do much to move the stock. We think this is due to investors looking beyond the statutory profits and being concerned with what they see.

Check out our latest analysis for Hyosung

The Impact Of Unusual Items On Profit

For anyone who wants to understand Hyosung's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from ₩8.0b worth of unusual items. While we like to see profit increases, we tend to be a little more cautious when unusual items have made a big contribution. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. Which is hardly surprising, given the name. If Hyosung doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Hyosung's Profit Performance

Arguably, Hyosung's statutory earnings have been distorted by unusual items boosting profit. Therefore, it seems possible to us that Hyosung's true underlying earnings power is actually less than its statutory profit. On the bright side, the company showed enough improvement to book a profit this year, after losing money last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about Hyosung as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Hyosung you should know about.

This note has only looked at a single factor that sheds light on the nature of Hyosung's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.